Accurately establishing and supporting the value of a business or intangible asset requires a strong foundation in valuation theory and deep experience in its application. Further, when a valuation is required in the context of a litigation dispute, added expertise in forensic accounting is often necessary to establish the factual components of the analysis through expert testimony.
The Hemming Morse valuation team is comprised of highly credentialed experts who possess extensive knowledge and experience in performing valuations of businesses and their assets in the dispute setting. Often, due to the complex nature of the disputes our clients are involved in, our experts are called on to go beyond the traditional valuation exercise by incorporating our seasoned forensic accounting techniques to the assignment. Accordingly, our expertise in valuation, coupled with our deep experience in litigation, allows our experts to provide high quality opinions of value and credibly defend such opinions through expert testimony.
Valuation of Failed Company in Employee Class Action
Hemming Morse’s detailed valuation of failed business’s stock plan allows employees to recover substantial losses.
Hemming Morse was engaged by a terminated employee class of a timber and forest products company that had recently failed. The company had established an Employee Stock Ownership Plan (ESOP) to which the sole shareholder had sold a significant portion of his shares based on a business appraisal prepared in connection with the ESOP transaction. The company raised the funds for purchase of the shares through a bank loan. Subsequently, it struggled to meet its cash flow requirements, including its debt service, and eventually failed. The employees were terminated and their ESOP shares became worthless. Hemming Morse’s assignment involved evaluating the establishment of the ESOP and calculating damages suffered by the employees, if any. Our team determined that the ESOP was set up at a price that was double the value of the shares at the time, which ultimately contributed to the failure of the company. Hemming Morse’s analysis of the impact of the ESOP transaction on the company’s financial condition and the determination of company value of prior to its demise enabled the employee class to recover a substantial amount of its losses.
Business Valuation in Antitrust Matter
Hemming Morse exposes flaw in calculation of business value lost and helps client favorably settle antitrust claims.
Our client, a large forest products manufacturer, was sued by a number of small lumber producers who alleged that the defendant had violated antitrust laws by manipulating log costs to drive its competitors out of business. Hemming Morse analyzed the plaintiffs’ financial books and records to determine if they supported these allegations. Further, the team analyzed the alleged lost business value for the plaintiffs who claimed to have been driven out of business as a result of the defendant’s alleged wrongdoing. Based on this detailed analysis, we determined that the plaintiffs’ books and records did not support the allegations made in the complaints and that the plaintiffs’ calculation of business value lost was seriously flawed. As a result, the client was able to settle for amounts substantially less than those claimed by the plaintiffs.
Valuation of a Resort Hotel/Condominium
Hemming Morse contributes to $73.4 million damages award for resort project that collapsed due to faulty construction.
Hemming Morse calculated the damages suffered by the owner and developer of a resort hotel and condominium project on the island of Guam. The mixed-use facility was not constructed in accordance with the approved plans, and shortly after its completion, Guam suffered a severe earthquake. Due to the faulty construction, the building collapsed, and it was condemned by the government. Hemming Morse calculated the value of the resort facility based on the income approach, considering the likely future benefit stream discounted to present value at an appropriate discount rate. The value of the facility was a consideration in the jury’s award of $73.4 million in damages to the owner.